SMEs Driving Demand for Coworking Spaces in India

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Article By Sumit Lakhani – CMO, Awfis

Small and Medium Enterprises have been growing rapidly with over 63 million SMEs in the country currently rising at an average growth rate of 10%. SMEs contribute to 45% of India’s manufacturing output and add to more than 28% of India’s GDP. The current MSME employee base of 128 mn is expected to grow to 170mn by CY 2022 (Source: Nasscom). With renewed economic reforms by the government comprising of streamlining of labour laws, ensuring digital integrations & creating SME/MSME friendly policies, the SME segment cannot be overlooked by the business ecosystem in India any longer. The Coworking ecosystem which was initially the go-to option for start-ups and freelancers has now become a prerequisite for SMEs. According to a recent report by the Confederation of Indian Industries and property consultancy JLL India, the biggest chunk of 10.3 million seats out of the total 12-16 million potential seats is ascribed to large companies. There is an equal divide of 1.5 million each amongst freelancers and SMEs. The smallest lot is formed by startups, at 100,000 seats. With a substantial shift from traditional offices to flexible workspaces attaining widespread acceptance, more & more SMEs are embracing coworking due to cost efficiency, flexibility, tech integrations, superior infrastructure, enhanced productivity, plug & play solutions and networking opportunities. Thus, allowing them to concentrate on their fundamental business minus the hassle of managing real estate. 

Some of the major factors contributing towards the popularity of coworking among SMEs include:

Economical & Viable

Due to the exorbitant costs of Grade A office infrastructure, most SMEs end up occupying Tier II buildings with Grade C infrastructure. Coworking players are solving this problem faced by SMEs by providing them Grade A infrastructure & an aesthetically designed work environment at affordable cost. Coworking spaces collaborate with service or product facilitators, thus making them easily accessible to SMEs, otherwise occupying a substantial proportion of the total cost as part of a traditional set-up. Coworking also fosters shared economy i.e. sharing common resources on the open floor which in turn helps in reducing fixed costs of the businesses. Shared workspaces are also providing enterprise level integrated solutions that allow SMEs to set up their individual head offices/satellite offices in association with a coworking player who manages the end to end building, setting up & operations of the workspace in a profitable manner. 

Plethora of choices

Shared workspaces deliver flexibility for SMEs looking at upsizing or downsizing teams, stepping foot into newer markets as well as encouraging remote working. Finding the right space and leasing process can take long and arranging basic facilities such as housekeeping, security, tech integrations etc. adds to the operational costs & stresses of setting up an office. Shared workspaces go beyond just being physical spaces and provide world-class facilities acting as full-time offices or floating spaces for those foraying into unknown territories. 

Networking & Business Opportunities

Collaboration is at the core of coworking spaces along with diversity playing a crucial role. Networking opportunities and access to potential clientele makes it the most favourable hub for SMEs. Work life balance is advocated at coworking spaces with the bunch of offerings which attracts the current workforce of India. In a coworking setup, SMEs get to intermingle with both start-ups as well as large corporates/MNCs. This helps them in imbibing the best practices of large corporates as well as get inspired from the hustle & entrepreneurial spirit of start-ups. This facilitates conversations thereby making the space an incubator of ideas and nurturer of talent. 

The notion of coworking spaces, in general, has provided a huge breather to the employees as well as employers. The right combination of plug and play environment, creativity, collaboration and knowledge creates a favourable ecosystem that provides an opportunity to the community members to flourish and prosper in. It is a model environment for any organization that enables them to focus exclusively on their business while other variables are taken care of by the coworking space provider. Coworking has already emerged as a robust trend in India and a perfect solution for SMEs workplace woes. 


SMEStreet Desk

SMEStreet is fast growing platform dedicated to entrepreneurs from small and medium sized businesses (SMEs). Committed to facilitate Knowledge & Networking for Business Growth, SMEStreet offers value added content which shows the actual voice of Indian MSMEs.

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